Dismissed

Sri M P Bopanna v. State Bank of India

DRT17 Nov 2023SA/427/2023

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal dismissed a Securitisation Application filed by a borrower seeking to set aside a sale notice issued by State Bank of India. The Tribunal upheld the validity of the security interest registration and clarified that simultaneous issuance of individual and public sale notices is permissible under SIA Rules, rejecting the applicant's contentions. The application was dismis

What did the court decide?

The Securitisation Application was dismissed and the authorised officer was permitted to continue proceedings pursuant to the sale notices.

Sri M P Bopanna versus State Bank of India — Contract and Commercial Disputes | DRT (2023)

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IN THE DEBTS RECOVERY TRIBUNAL - I, KARNATAKA AT BENGALURU

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PRESENT: SRI IMTI AZ ALT PRESIDING OFFICER

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Dated the lTth day of November,2O23

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SECURITISATION APPLICATION NO. 427 OF 2023

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Between

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M P Bopanna, S/olateMKPoovaiah, (Proprietor, M/s Sara Agro), Sy No. 1 1 5 12, Yalehalli, Hullahalli Hobli, Nanjanagud, Musuru, Kamataka - 571314. .. . .....Applicant

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And

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State Bank of India, Stressed Assets Recovery Branch, 1llg0,3'd F100r, , Opp Trust Well Hospital, J C Road, Bengaluru, Karnataka - 560002. Defendant

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This Securitisation Application having been heard on 17.10.2023 in the presence of Advocate Shri V Mohan for the applicant, and Advocates M/s G.N Satyamurthy, Mahadeva Vivek and Navya N for the defendant. and stood over to this day for consideration, the Tribunal delivered the fbllowing:-

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FINAL ORDER

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The applicant filed the above Securitisation Application (SA) on 11 .09.2023 under 5.17(1) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 asamended from time to time -^hereinafter referred to as'the Act'- praying to set aside the sale notice dated 18.08.2023.^The applicant is none other than the borrower of a financial^assisiance in^{the form of} agricultural loan availed from the defendant bank.

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The case set out by the applicant in the SA in brief is as follows:- The applicant has availed an agricultural term loan from the defendant bank. Before receipt of agricultural subsidy due from National Horticultural Board, Haryana through the defendant bank, the classification of the loan account as non-performing asset is invalid. The demand notice, possession notice and the sale notice were not served on the applicant, specifically not stating the name of the principal borrower firm, M/s Sara Agro. Subsequent to the possession notice dated 09.08.2023, the sale notice was issued on 18.08.2023 without giving time for redemption. The security interest created over the secured asset has not been registered with the Central Registry and hence the defendant is not entitled to enforce its security interest over the secured asset. The sale notice dated 18.08.2023 is incomplete and defective due to omission of date and time of auction, bid submission and non-service of the same to the applicant. The sale notice published in the newspaper was not served on the applicant. The sale notice served on the applicant was noi published in the newspaper. The same was not affixed also. Without claiming the agricultural subsidy, the claim made in the sale notice is unsustainable. The reserve price of {46,98,000/- fixed in the impugned sale notice is lower than the previous auction reserve price of <65,24,000/- in the auction dated 30.05.2023. On the above contentions, the applicant prayed for setting aside the sale notice dated 18.08.2023.

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The defendant filed a statement of objection refuting the prayer sought for and contending as follows:- All mandatory notices such as demand notice, possession notice and the sale notice have been given and duly acknowledged by the applicant. Though the loan availed is an agricultural loan, the property sought for sale is a nonagricultural property. Under the loan documents, there is no mention of the loan sought for was under the NHB subsidy scheme. The defendant has complied with all procedural requirements contemplated under law. The account was classified as non-performing 31.10.2022 in accordance with the directives and guidelines relating to asset :::,^",

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classification issued by the Reserve Bank of India. The reserve^price is^fixedbased on^the valuation made by the Shradda Associates^(consulting engineers and approved valuers) on 14.06.2023. The security interest created on the secured^asset has been^{registered with} the Central Registry. On the above contentions, the defendant^prayed for dismissal of the SA.

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The applicant produced two documents along with the SA. For convenience, they are referred to as Annexures Al and A2. Similarly, the defendant produced fourteen documents along with the statement of objection, which are for convenience referred to as Annexures B1 to B14. However, it^was desirable^for a^public sector bank like the defendant bank to^produce the originals of the^postal receipts,^postal acknowledgement cards, photographs, report of affixture, dailies etc instead of^producing the piecemeal evidences before this Tribunal by way of^photocopies of the^same.

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On appreciation of the rival contentions, the only issue arises for consideration is as to whether the applicant is entitled to the relief^prayed for?

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The Issue:- This Tribunal would like to make a^passive remark that the authorised officer who issued Annexures A1 and A2 sale notices dated 18.08.2023 on behalf of the defendant bank should have been made a^party in the cause title to^the SA. The right to sue accrues under S.l7(1) of the Act to any^{person (including} borrower) if^he is aggrieved by any of the measures referred to in sub-section⁽⁴⁾ of S.13 of the Act taken by the secured creditor or his authorised officer under^{the Act.Thesecuredcreditor is a} creditor holding security the realisation of which^would satisfy^{his claim. S.l3(12) of the} Act says that the right of the secured creditor can be exercised by one or^{more of his} officers authorised in the manner^as may be^{prescribed.'Authorised officer' under R.2(a)} of the Security Interest^{(Enforcement)} Rules, 2002^(as amended^{from time to time)} -^for short'the Rules' - is an officer of the secured creditor^{who is competentto exercise the}

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of the secured creditor and also right of the creditor^{secured under the} Act^andto :::,r

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exercise power in respect and also any other right of the secured creditor conferred under the Act. In the instant case, the defendant secured creditor being a public sector banking company, it can only be represented by its principal officer. On the showing of the applicant itself, he is aggrieved by Annexures A1 and ,A,2 action taken by the authorised officer on behalf of the said banking company, who does not have an independent status without the existence of the secured creditor. Therefore, in the opinion of the Tribunal, the authorised officer of the defendant secured creditor banking company also should have been made a party in the cause title along with the secured creditor.

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Admittedly, the applicant has availed an agricultural term loan from the defendant bank and the schedule immovable property is the secured asset relating thereto. The defendant has submitted that the account relating to the agricultural term loan availed by the applicant was classified as non-performing asset on 31.10.2022 in accordance with the directives and guidelines relating to asset classification issued by the Reserve Bank of India. But according to the applicant, before the receipt of agricultural subsidy due from National Horticultural Board, Haryana through the defendant bank, the classification of the loan account as non-performing asset is invalid. It is also submitted by him that without claiming the agricultural subsidy, the claim made in the sale notice is unsustainable. But, according to the defendant, though the loan availed is an agricultural loan, the property sought for sale is a non-agricultural property and under the loan documents, there is no mention of the loan sought for was under the NHB subsidy scheme.

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It may be noted that the aforesaid contention raised by the applicant regarding claiming of agricultural subsidy due from National Horticultural Board, Haryana through the defendant bank would not come under the purview of this Tribunal in an application filed under S.17(l) of the Act. No adjudicatory power to examine the *. to the secured creditor as claimed by its authorised officer under the mandatory :::

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notices has been^given to the Tribunal. After examining the facts and circumstances of the case and the evidence adduced by both sides, what has to be scrutinised by the Tribunal is as to whether the measures taken by the secured creditor or its authorised officer under sub-section^(a) of S.13 of the Act are in accordance with the^provisions of the Act and the Rules made thereunder or not. Therefore, this Tribunal cannot entertain such contention during the proceedings in an application filed under S.17(l) of the Act.

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It is also contended by the applicant that the demand notice, possession notice and the sale notice were not served upon him, specifically not stating the name of the principal borrower firm, M/s Sara Agro. It is also submitted by him that subsequent to the possession notice dated 09.08.2023, the sale notice was issued on 18.08.2023 without giving time for redemption. Per contra, according to the defendant, all mandatory notices such as demand notice, possession notice and the sale notice liave been given and duly acknowledged by the applicant and the defendant has complied with all procedural requirements contemplated under law.

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The core issue relating to the SA is the service of notices in terms of the Act and the Rules made thereunder. The applicant is aggrieved by the infirmity occurred in such service only. S.13 of the Act deals with enforcement of security interest and subsections (2) and (3) thereto specifies the mode of requirement by the secured creditor to

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the bonower by notice in writing to discharge the debt due, and it reads as below:-

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"(2) Where any borrower, who is under a liability lo a secured creditor under a security qgreement, makes any default in repayment of secured debt or any instalment thereof, and his account in respect ofsuch debt is classified by the secured creditor as non-performing^qsset, then, the secured creditor may require the borrower by notice in writing to discharge in full his liabililies to the secured creditor within sixty days from the date of notice failing which lhe seatred creditor shall be entitled to exercise all or any ofthe rights under sub-section^(4):

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PROVIDED that -

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(, the requirement of classification of secured debt as non-performing asset under lhis subsection shall not apply to a borrower who has^raised funds^through issue^{of debt securities; and}

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. (ii) in the event of default, the debenture trustee sholl be entitled to enforce security interest in the some manner as provided under this section with such modifications as may be^necessary andⁱⁿ accordance with the terms and conditions of security documents executed in favour of^thedebenture trustee.

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(3) The notice referred to in sub-section (2) shall give details of the amount pqyable by the borrower^qnd the secured assets intended to be enforced by the secured creditor in the event of nonpayment of secured debts by the borrower. "

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1 1. Sub-section (a) of S.l3 of the Act deals with the recourses could be taken

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by the secured creditor in case the borrower fails to discharge his liability in full within

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the specified period in the notice issued under sub-section (2), and it reads thus:-

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"(a) In case the borrower fails to discharge his liability in full within the period specified in subsection (2), the secured credilor may take recourse to one or more of thefollowing meosures to recover his secured debt, namely:-

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(a) take possession of the secured assets of the borrower including the right to transfer byway of lease, assignment or salefor realising the secure asset;

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(b) take over the manqgement of the business of the borrower including the right to transfer by way oflease, assignment or salefor realising the secured asset:

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PROVIDED that the right to transfer by *qy of lease, assignment or sale shall be exercised only whqre the substantial part of the business of the borrower is held as securityfor the debt:

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PROVIDED FURTHER that where the management of whole of the business or part of the business is severable, the secured creditor shall take over the management of such business of the borrower, which is relatable to the security or the debt.

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(c) appoint any person (hereafter referred to as the manager), lo ntanage the secured assets the possession ofwhich has been taken over by the secured creditor,'

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(d) require at^qny time by nolice in wriling,^qny person who has acquired any of the secured assetsfrom the borrower andfrom whom any money is due or may become due to the borrower, to pay the secured creditor, so much of the money as is sfficient to pqy the secured debt."

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R.3 of the Rules lays down the procedure to be followed in taking measure

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under S.13 of the Act in respect of demand notice, which reads as under:-

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"(l) The service of demand notice as referred to in sub-section (2) of S.l3 of the Act shall be made by delivering (including hand delivery) or transmitting at the place where the borrower or his agent, empowered to accept the notice or documents on behalf of the borrower, actually and voluntarily resides or carlies on business or personally works for gain, by registered post with acknowledgement due, addressed to lhe boruower or his^qgent empowered to accept the seryice or by speed post or by courier or by any other means of transmission of documents likefu message or electronic mail service:

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PROVIDED that where authorised oficer has reason to believe that the borrower or his agent is avoiding the service ofthe notice or thatfor any other reason, the service cannot be made as aforesaid, the seryice shall be effected by affaing a copy of the demand notice on the outer door or some other conspicuous part of the house or building inwhich the borrower or his agent ordinarily resides or carries on business or personally works for gain ond also by publishing the contents of the demand notice in two leading newspapers, one in vernqcular language, having sfficient circulation in thal locality.

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(2) ll/here the borrower is a body corporale, the denand notice shall be served on the registered ofice or any of the branches of such body corporate as specified under sub-rule(l).

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(3) Any other notice in writing to be served on the borrower or his agent by authorised fficer, shall be served in the same manner as provide in this rule.

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(4) Where there ere more than one borrower, the demand notice shall be served on each borrower.

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(5) The demand notice may invite atlention of the borrower to provisions of sub-section (8) of ' S. 1, of the Act, in respect of time available to the borrower, to redeem lhe secured a,s.rers.^"

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Sub-rules (1) and (2) of R.8 of the Rules deals with the mode of delivering

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the possession notice and it reads thus:-

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, " (l ) Where the secured asset is an immovable property, the authorised fficer shall take or cause to be taken possession, by delivering a possession notice prepared as nearly as possible in AppendixJV to these rules, to the borrower and by ffixing the possession nolice on the outer door or at such conspicuous place of the property.

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(2) The possession notice as referred to in sub-rule (l) shall also be published, qs soon as possible but in any cqse not later than seven days from the date of taking possession, in two leading newspqpers, one in vernacular language having sfficient circulation in that locality, by the authorised officer.

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(2A) All notices under these rules may also be served upon the borrower through electronic mode of service, in addition to the modes prescribed under sub-rule (l) and sub-rule (2) of rule 8."

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Annexure 83 is the demand notice dated 02.11.2022 issued under S.13(2) of the Act by the authorised officer of the defendant bank addressed to the applicant calling upon him to discharge the debt amounting to the sum of <59,07,713/- due under various credit facilities availed by him from the defendant bank as on 02.11.2022 within sixty days from the date of such notice. It was stated therein that the operation and conduct of the aforesaid credit facilities have become irregular and the debt has been classified as non-performing asset on 31.10.2022 in accordance with the directives and guidelines relating to the asset classifications issued by the Reserve Bank of India consequent to the default committed by him in repayment of the principal debt and the interest thereon. The attention of the borrower was invited therein to the provision under sub-section (8) of S.l3 of the Act in respect of the time for redemption of the secured assets. Annexure 83 notice takes care of the details of the amount payable by the borrower and the details of the secured assets intended to be enforced by the secured creditor in the event of non-payment of the secured debt by the borrower by way of schedule therein. Annexures 84 and 85 photocopies of the postal acknowledgement cards appended thereto show that Annexure 83 notice sent by registered post to the applicant had been duly served upon him on 05.11.2022.

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In the above circumstances, the applicant is duly served by Annexure B3 demand notice. Annexure 86 is the possession notice dated 09.08.2023 issued to the

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applicant by the authorised officer of the defendant bank under S.l3(4) of the Act taking possession of the secured asset in respect of the loan availed by him. Annexure 87 (series) of photocopies of postal acknowledgement cards and the postal track consignment reports show that the said notice had been duly served on the applicant on 14.08.2023. No doubt, the possession was taken well after the expiry of sixty days from 05.11.2022, when Annexure 83 notice was served upon the applicant. Annexure Bl is the photocopy of the photograph taken for affixture of Annexure 86 possession notice.

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It is submitted by the applicant that subsequent to the possession notice dated 09.08.2023, the sale notice was issued on 18.08.2023 without giving time for redemption. If the borrower fails to discharge his liability in full within the period as specified in sub-section (2) of S.13 of the Act, the secured creditor is entitled to take recburse to one or more of the measures including sale of the secured asset as specified in sub-section (a) of S.l3 of the Act to recoverhis secured debt. No time span is specified for the same. Once possession of the secured asset is taken, the authorised officer or the secured creditor has to follow the guidelines as prescribed under Rr.S & 9 of the Rules in sale of immovable secured assets. The relevant provisions commence from sub-rule (5)

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of R.8 of the Rules. The relevant provisions read as below:-

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"(5) Before fficting sale of the immovable property referred to in sub-rule (l) of rule 9, the authorised fficer shall obtain valuation of the property fron an approved valuer and in consultation with the secured creditor, fix the reserve price of the property and may sell the whole or any parl of such immovable secured^qsset by any of thefollowing methods:-

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' (a) by obtaining quotations from the persons dealing with sirnilar secured assets or otherwise interested in buying the such assets; or

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(b) by inviting tenders from the public;

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(d) by private treaty:

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PROVIDED that in case of sale of immovable property in the State of Jammu and Kashmir, the provisions of Jammu and Kashmir Transfer of Property Act, 1977 shall apply to the^person who acquires such property in the State.

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(6) The authorised officer shall serve to the borrower a notice of thirty days for sale oJ' the immovable secured assets, under sub-rule^(5):

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PROVIDED that if the sale of such secured asset is being effected by either inviting tenders from^{the public or byholdingpublic auction,the securedcreditorsshall causea publicnoticein theform}

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given in Appendix IV-A to be published in two leading newspopers including one in^vernacular language having wide circulation in the locality.

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(7) Every notice of sale shall be affixed on the conspicuous parl of the immovable property and the authorised fficer shall upload the detailed terms and conditions of^{the sale, on the web-site} of^the secured creditor, which shall include-

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(a) the desuiption of the immovable property to be sold, including the details of the encumbrances known to the secured creditor;

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(b) the secured debt for recovery of which the properly is to be sold;

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' (c) reserve price of the immovable secured assets below which the property mqy not be sold;

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(d) time and place of public auction or the time after which sale by any other mode shall be

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completed;

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(e) deposit of earnest money as may be stipulated by the secured creditor;

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A^{any other terms and condilions, which the authorisedofficer considersit necessary} for^a purchqser to know the nature andvolue ofthe property.

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(8) Sale by any method other than public auclion or public tender, shall be on such terms as may be settled between the secured creditor and the^{proposedpurchaser} in^writing.

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Time of sale, issue of sale certificate and delivery of^possession, etc.

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(l) No sale of immovable property under these rules, in first instance shqll tqke place before the expiry of thirty days from the date on which the^{publicnotice of saleis published in newspapersas referred} to in the proviso to sub-rule⁽⁶⁾ or rule 8 or notice of^{sale has beenservedto the boruower:}

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PROVIDED FURTHER that if sale of immovable^property by any one of the methods^{specified by} sub-rule⁽⁵⁾ of rule 8 fails ond sale is required^to be conducted^{again, the atrthorisedofficer shall serve,} affix and publish notice ofsale ofnot less thanfifteen days^{to the borrower,} for^{any subsequent sale.}

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' (2) The sale shall be confirmed in favour of the purchaser who has ofered the highest sale price in his bid or tender or quotqtion or offer to the authorised oficer and^shall be^{subject to confirmation by} the secured creditor:

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PROVIDED that no sale under this rule shall be confirmed, if the amount^offered by sale^priceis less than the reserve price, specified under sub-rule⁽⁵⁾ of^rule 8;

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PROVIDED FURTHER that if the authorised olficer fails to obtain^{a price higher than the reserve} price, he may, with the consent of lhe borrower and the secured creditor effect the sale at such^price.

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(3) On every sale of immovable property, the purchuser shall imntediately, i.e on the same day or not later than next working day, as the case may be,^pay a depc.tsil of twenty-five^per cent of lhe amount of the sale price, which is inclusive of earnest money deposited, d any, to^the aulhorised^olrtcer conducting the sale and in default ofsuch deposit, the^property shall be sold^again.

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(4) The balance^qmount of purchase price payable shall be paid by the purchaser to the quthorised fficer on or before the fifteenth doy of confirmation of sale of the immovable property or such extended period as may be agreed upon in writing between^{thepurchaser and lhe securedcreditor, in any} case not exceeding three months.

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(5) ln default of payment within the period mentioned in sub-rule (4), the deposit shall be forfeited^{to the secured creditorand the property shall be resold qnd the defaulting purchasershall forfeit} all claims to the property or to any part of the sumfor^which il^{ntaybe subsequently sold.}

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(6) On confirmation of sale by the secured creditor and if lhe terms of payment hqve been complied with, the authorised fficer exercising the^{power c{ sale} shqll^issue a^{certificate of sale of the} immovable property infavour of the purchaser in theform^{given in AppendixV to theserttles.}

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(7) Ihhere the immovable properly sold is subject to any encumbrances, the attthorised offcer mqy, f he thinks fit, allow the^purchaser to deposit with him^{lhe moneltrequired} to^{discharge the} encumbrances and any interest due^{thereon together wilhsuchudditionalamounl lhat maybe sulficient to} meet lhe contingencies orfurther cost, expenses and^{interestas may be determined by him:}

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PROVIDED that if after meeting the cost of^removing encumbrances^{and contingencies thereis} any surplus ovailable out of the money deposited by^{the purchaser such surplus shallbe paid to the} within Jifteen days from the date o finalisation of the sale. :."-r^u

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(8) On such deposit of money for discharge of the encumbrances, the authorised officer shall issue or cause the purchoser to issue notices lo the person interesled in or enlillecl lo lhe ntoney deposited with him and take steps to make the payment accordingly.

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(9) The authorised o/ficer shall deliver the property to the purchaser Jiee from encumbrances known to the secured creditor on deposit of money as specified in sub-ntle⁽⁷⁾ above.

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(10) The certificate of sale issuedunder sub-rule (6) shall specifically mentionthatwhether the purchaser has purchased the immovable secured assetfreefrom any encuntbrances known to lhe secured creditor or not."

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ll. Annexure ,A.2 (Annexure 88) is a copy of the notice for sale dated 18,08.2023 issued by the authorised officer of the defendant bank bringing the schedule immovable property for sale for recovery of debt due from the applicant in respect of the loans availed by him from the defendant bank. Annexure 89 shows that the said notice sent by registered post to the applicant had been delivered upon him on 21.08.2023. Annexure A1 is the photocopy of the extract of publication of Annexure A2 (Annexure 88) in English daily. Though the defendant claimed that Annexure 810 is the photocopy of publication of Annexure B8 in Kannda daily, the same is only a photocopy of the extract of publication of Annexure 86 in Kannada Prabha daily dated 11.08.2023. The def'endant filed memo on 31.L0.2023 producing the relevant page of the New Indian Express daily dated 22.08.2023 wherein the notice for sale dated 18.08.2023 had been published in English. Annexure 813 is the photocopy of the photograph showing affixture of Annexure A2 (Annexure 88) sale notice dated 18.08.2023 on the front door or at a conspicuous place of the property on 23.08.2023. According to the applicant, what served upon him and what published in the newspapers are two different notices. It may be noted that Annexure .A.2^(Annexure 88) is the notice of intention of sale issued to the applicant in which a copy of Annexure Al also was included, which is intended for public. All details such as the reserve price, date, time and mode of e-auction, details of property etc were included in Annexure A,2 (Annexure 88) in terms of sub-rule⁽⁷⁾ of R.8 of the Rules. It is common knowledge that all details enumerated thereunder cannot^be made of publication for want of costs and expenditure, which will ultimately come on the only. An abstract of the details in the issued notice only can be^published. It is :rylicant

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specifically mentioned in every such notice that for various other details, the reader may visit the website of the bank through the link provided therein. Therefore, this Tribunal does not see any infirmity in the sale notice for want of any necessary required data.

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It is the contention of the applicant that the demand notice, possession notice and the sale notice were not served on the applicant, specifically not stating the name of the principal borrower firm, M/s Sara Agro. As stated above, all such mandatory no(ices have been duly served on the applicant. It appears to be his case that in all such notices the name of his proprietary concem, 'lWs Sara Agro' has not been mentioned, who, according to him, is the mortgagor and the principal borrower. But, according to the defendant, M/s Sara Agro is one of the addresses given by the applicant at the time of availing loan from the bank, who is neither the borrower nor tlie mortgagor. It is submitted by the defendant that the applicant in^person is the mortgagor and the borrower.

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It may be noted that on the showing of the applicant itself, M/s Sara Agro is his proprietary concern and he is carrying on his business under the name and style 'M/s Sara Agro'. As per O.30 R.10 of the Code of Civil Procedure, 1908, any^person carrying on business in a name or style other than his own name, may be sued in such name or style as if it were a firm name. It was held by the Hon'ble High Court of Kerala in B.S Bhasi v K.M Purushotham Das [reported in WNU/KE/] 423/2017 : 2017⁽⁴⁾ KLT 705J that a proprietary concern is not a legal entity distinct from its^proprietor, and it reads thus:-

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"We must immediately note that we^qre only concerned with ceses wherein cheques hqve been issued by outhorised signatories for and on behalf of the^proprielaty concern. As^contrasted from^a corypany incorporated under the Companies Act, 1956 which is a legal entity^distinct from^its shareholders, a proprietary concern is not a legal^entity distinctfrom^{its proprietor.A proprielaryconcern} is nothing but an individual trading under a trader name. A^personnray carry^{on business in the name of a} business concern, but he being^{proprietor thereof would} be^{sole responsibleforconduct ofitsaffairs."}

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It was held in P.K Himatsingka & Co v Collector of Customs [reoortedⁱⁿ

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(1994t 72 ELT 713 : 1994 (72t ECR 164 : MAIIIU/CE/0173/19941 that a proprietary

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concern is not a^{juristic person.} It was held by the^Hon'ble High^Court of^{Kerala in} Sebastian Joseph v Reserve Bank o-f India [reported in^{20]9 (3\ KLT 58lJ thata} proprietary concem is nothing, but an individual trading under^a trade name. The^Hon'ble High Court of Kerala inGopalalcrishnan Nair^{v Little FlowerTex} freported^{in 20]8 (2)} KLT SN 52^(C.No.62U has held that a^{proprietorrepresentingproprietorshipconcemor} proprietorship concem represented by^{proprietor has same substanceandessence and} same entity and that even^{in a case wheredrawer of the cheque is a proprietaryconcern} which is not having any corporate^{legal existence,it is not required that the sole} proprietary concern has to be made an^{accused. The relevantportionreads thus:-}

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"Proprietor representing the proprietorship concern or^{proprietorshipconcern representedby} proprietor hai same substance and essence^{and same entityeven in a case vherethe drawer of the cheque} is a proprietary concern,^{whichis not having any corporatelegal existence.Therefore, in these} circumstinces, the^{accuseddrqwer ofthechequecouldhave beenarrayedin any ofthemqnner as stated} hereinabove and merely^{because the accused has not describedSriLawrenceC Antonyas proprietorofthe} concern, will not lead to acquittal^{oftheaccused on thal groundalone."}

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Zl. The Hon'ble Supreme^{Court in Raghu Lakshntinarqtonan v Fine Tubes}

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held that a suit by or against^{a proprietaryconcernis by or against the proprietorof the}

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business, and it reads^so:-

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,,A proprietary concern is only the business name in which the proprietor of the business carries on the business. A^{suit by or againsta proprietaryconcern is by or againsttheproptietor ofthebusiness.} The provisions of Rule l0^{of OrderXXX, which make applicabletheprovisionsof Order XXXto a} proprielary concern, enable^{the proprietorofa proprietarybusiness lo be sued in the business namesofhis} 'proprietary concern. The real party who is being sued is the proprietor of the said business."

¶127

Hence, in the opinion^{of this Tribunal, the applicant and his proprietary concern,M/s} Sara Agro are one and^{thesame,namely, the applicanthimself'}

¶128

It is also contended^{by the applicant that the sale notice dated 18.08.2023} issued to him and^{the same publishedin the newspaper are different. It rnay be noted that} the sale notice^{issuedto the applicant was the noticeof thirtydays for sale of the secured} asset in terms of sub-rule^{(6) of R.8 of the Rules and the notice published in the} newspapers was the^{public notice of salein termsof sub-rule (1) of R'9 of the Rules.It} appears to be his^{casethat the noticeof intention of sale to the borrower andthe notice of}

¶129

sA 427/2023

¶130

¶131

sale for public was issued and published by the authorised officer simultaneously, which is bad, according to him.

¶132

Going by the provisions under sub-rule (6) of R.8 and sub-rule (l) of R.9 of the Rules, there is no express provision given thereunder to issue such notices separately but what mandatory is to keep in tally with the parameters thereunder. No doubt, the applicant was served with a notice of sale with a clear gap of thirty days to the sale comprising all the necessary and required details regarding the sale and the secured assets. There is nothing wrong in simultaneously issuing a notice for public for the pu(pose of publication with similar details in abstract. The Hon'ble Supreme Court in Canara Bankv Amarender Reddy freported in 20]7 (2.) KLT SN 18 (C.No.26) SCI has held that no express or implied restriction on simultaneously issuing notice to borrower about intention to sell and notice to public for sale of such asset and that a notice to borrower regarding creditor's intention to sell the asset and pr"rblic notice for sale simultaneously issued is permissible. The relevant portions read as belor,v:-

¶133

"The secured creditor, after it decides to proceed with the sale of seared asset consequenl to taking over possession (symbolic or physical as the case may be), is no doubt required to give a notice of 30 days for sale of the imntovable asset as per sub-rule (6) of R S However, therc is nothing in rhe Rules, either express or implied, to take the view that a public notice under sub-rule (6) of R S must be issued only afte1 the expiry of 30 days from issuance of individual notice by the authorised ofiicer to the borrower about the intention to sell the immovqble secured asset. In other words, it is permissible to simultaneously issue notice to the borrower about the intent to sell the secured ossets and also lo issue a public noticefor sale of such secured asset by inviting tenders from the public or by holding public auction. The only restriction is to give thirty days' tine gqp between such notice and the date o/'sole of the immovable secured asset. The only restriction placed on the secured creditor i.c to serve a notice of 30 days on the borrower intimating him about its intention lo sell the intmovuble seutred asset qnd the mode and date fixedfor^{sale; and also lo issue a publicnotice in two leadingnewspapers,} i.f the sale oJ-such secured asset is effected either by inviting tenders or by holding public auction, notifying the clate oJ'sale after 30 clear day from such notice. There is no need to wail for the expiry o/'30 days from issuunce of notice of intention to sell the secured asset given to the borrower,for publication o/ u public noticefor.sale o.f'such asset. Nor is there any requirement to give a separate individual notice prior to deciding on the ntode of sale of the secured asset.^"

¶134

"It is permissible to simultaneously issue notice to the borrowet' aboul the intention to sell the secure assets and also to issue a public notice for sale of such secured asset by inviting tenders from the public or by holding public auction, the only reslriclion being to give thirty day.s tinte gap between sttch notice and the date of sale of the immovable secured asset. "

¶135

"There is no dfficulty in accepling the observation o.f'the High Courl that pos.session notice is distjnct from the notice for sole of the secured asset. ln that, possession notice is required to be given in terms of R.8(l) read with R.8(2). ll/hereas, a notice of intention of sale is required to be given to the borrower in terms of R.9(l) reqd with R.8(6) of the said Rules. This is to give intintation to the borrower about the proposed date ofsale to be held after the statutory period of thirty days. Further, in case ofsale of the secured^qssets either by inviting tenders from the public or by holding ptrblic auction being the mode

sA42712023

permitted by sub-rule (5) of R.8, the secured creditor is recluired to give a public notice in two leading newspapers in terms of the proviso in sub-rule (6) of R8 Such public notice, however, may not be necessary in case of sole of a secured asset if it is by way of the other modes specified in clause (a) or (d) of sub-rule (5) of R.8 lo wit, by oblaining quotations from the persons dealing with similar secured assets or otherwise interested in buying such asset; or by private treaty.

¶140

The secured creditor, after it decides to proceed with the sale of secured asset consequent to taking over possession^(symbolic or physical as the case may be), is no doubt required to give a notice of 30 days for sale of the intmovable asset as per sub-rule⁽⁶⁾ of R.8 However, there is nothing in the Rules, either express or implied, to take the view that a public notice under sub-rule (6) of R.8 must be issued only after the expiry of 30 days from issuance of individual notice by the authorised olJicer to the borrower about the intention to sell the immovable secured asset. In other words, it is permissible to simultaneously issue notice lo the borrower about lhe inlenlion to sell the secured assets ctncl^qlso to issrre o public notice for^{sale of such secured asset by invitingtenders} from^{the public or by holdingpublic auction.The only} restriction is to give thirty doys time gqp between such notice and the date of sale of the immovable secured qsset.

¶141

The High Court has committed a manifest error in assunting thal eth notice of intention of sale to be given to the boruower and a public notice for ale cqnnot be simultaneously issuecl. The High Court was also not right in observing that after a notice regarding intention to sell the seared asset under sub-rule (6) of R.8 is given by the authorised fficer to the borrower, c-trtly on expiry of 30 days therefrom can the secured creditor take a decision about the mode of sale referred to in sub-rttle (5) of R I aJier giving notice to l(te borrower and then issue a public notice afler expiry offitrther thirty day-s. By this interpretation, the High Court has virtually re-wrilten the provisions and the inevitably extended the time-frame of 30 days specified in sub-rule (6) of R.8 (at least in relation to the sale oJ'searred asset by inviting tenders from the public or by holding public auction).

¶142

To put it differently, the only restriction placed on the secured creditor is to serve a notice of 30 days on the borrower intimating him^qbout its intention to sell the immovable secured asset^qnd the mode and date fixed for sale; and^qlso to issue a public notice in ttro leading ne\vspapet s, i/. the sale of such secured asset is effected either by inviting tenders or by holding public utrction, notiJying the date of sole after 30 days clear days from such notice. There is no need to wait for the expiry oJ'30 days.from issuence of notice of inlention to sell the secured assel given lo the borrower, for publication of a public notice for sale of such asset. Nor is lhere any requirenlent to give a scporale individual notice prior to deciding on the mode of sale of the secured asset. To the above extenl, the opinion ol' the High Court in the impugned judgement will have to be overturned.

¶143

In the present case, as the public auction-sale held on 21.11.2015 has not ruaterialised, the appellant may have to resort to a fresh public notice for sale of the securecl asset o/' Respondent l, if the outstanding liability is still unpaid and the sale is to be fficted either by inviting tenders from the pubic or by holding public auction.^"

¶144

, 24. Yet another contention raised by the applicant is that the reserve price of

¶145

¶146

{46,98,000/- fixed in the impugned sale notice is lower than the previous auction reserve price of {65,24,000/- in the auction dated 30.05.2023. According to him, the fixation of the reserve price is not based on valuation conducted within six months from the date of auction sale as required under sub-rule (5) of R.8 of the Rules. However, it is submitted by the defendant that the reserve price is fixed based on tlie valuation made by the Shradda Associates (consulting engineers and approved valuers) on 14.06.2023. Neither side has put a light on the point as to the sale held on29.09.2023 was for the first instance or'a subsequent sale. Therefore, what is meant by^'previous allctiorl reserve price' as

¶147

sA 42712023

¶148

¶149

submitted by the applicant^{is not known to this Tribuural. No such sale notice has been} produced before this Tribunal by either^{side. AnnexureB12 is a photocopy of the} valuation report dated 14.06.2023^{in respect of the schedule imn-rovable property} submitted by Shd R^{Vasanthmadhava(consulting engineerand approved valuer)} empanelled with the defendant^{bank. The valuer, as a result of his appraisal and analysis} in his considered opinion in the^{prevailing condition and withthe specifications of the} property as given thereunder has reported the market^{value of the sameat <52.20lakhs;} realisable value at {46.98 lakhs and the^{distress sale value at 742,28,200/-. The reserve} price fixed as against the schedule immovable property in the sale^noticedated 18.08.2023 was {46.98 lakhs. In the above circumstances, it^{r-naybe noted thatbefore} effecting sale of the schedule immovable^property on29.09.2023,^{the authorisedofficer} of the defendant bank had obtained Annexure B12^{valuation report dated 14.06.2023 in} respect of the schedule immovable^property from an approved^valuer and^{in consultation} with the defendant bank fixed the reserve price of such^property and thereafter only brought such property for sale by holding^public auction through e-auction mode. In the above circumstances, this Tribunal does not find any force in the contention raised by^the applicant regarding valuation and the reserve^price fixed in^respect of the^schedule immovable property.

¶150

¶151

Lastly and finally, it was also contended by the applicant that the security interest created over the secured asset has not been registered with^{the Central Registry} and hence the defendant is not entitled to enforce its security^{interest overthe secured} asset. On the contrary, according to the defendant,^{the security interest created on the} secured asset has been registered with the Central Registry.^{Goingby the evidences} adduced by the defendant, Annexure B14^is a copy of^{the computer generated id based} search report downloaded from the^website of^{the CentralRegistry. A perusal of the same} r/w Annexure B I I photocopy of the memorandum^{for recording creationof mortgage by}

¶152

¶153

sA 42'.7t2023

¶154

deposit of title deeds executed^{on 28.02.2017 betweenthe applicant and the defendant} bank shows that the applicant^{had createdsecurity interestby way of equitable mortgage} over the schedule immovable^{propertyin favour of the defendantbank and the same is} registered with the Central^{RegistryunderBSR Code:0007346.}

¶155

In the above circumstances^{and in view of the discussionsas above, it is} found that the applicant, in^{fact, is not aggrievedby the recoLlrse and measurestaken by} thqauthorised officer of the defendant^{bank under sub-section(a) of S.13 of the Act in} issuing Annexures Al and 42^{sale notices dated18.08.2023in respectof the schedule} immovable property. Therefore,^{the SA is liableto be dismissedas devoidof any merit,} and, hence, notwithstanding^{anything contained in any other law for the time being in} force, the authorised officer of^{the defendantbank is entitled to continuewithfurther} proceedings pursuant to Annexures Al^{and A2 sale notices dated18.08.2023.}

¶156

In the result, IA^{No.192812023is closed and SA 42712023 is dismissed.} The authorised officer of the defendant^{bank, notwithstanding anythingto the contrary} contained in any other law^{for the time being in force, is pemrittedto continuewith the} further proceedings in^{pursuantto AnnexuresAl and A2 sale notices dated 18.08.2023.} The parties shall suffer their^{respective costs.}

¶157

Communicate copy of^{this final order to both parties as providedin sub-} section (7) of S.17 of^{the Act r/w R.l6 of the Debs RecoveryTribunal (Procedure)Rules,} 1993 (as amended from time^{to time)'}

¶158

[Dictated^{to my PAdirectlyon the computer,coyectedantl pronouncedb1, n1s in tlrc openTribunalon this tlrc]7th} iay ofNovembir,2l23l

¶159

\Y' t l^{rrrar\az ALI} l PRESIDING OFFICER

¶160

¶161

Appendix to SA 42712023

¶162

APPENDIX

¶163

Applicant's Exhibits

¶164

Witnessforthe	applicant	Nil
Witnessfordefe	ndant	Nil
ExhibitNo.	Date	Particularsofdocuments
Annexure-A1		Photocopyoftheextractofthe^{publicationofsale notice} dated18.08.2023 uradeinEnglish
Annexure-A2	18.08.2023	Photocopyofthe noticeforsale^{issuedbytheauthorised} officerofthedefendantbanktothe applicant^inrespectof saleofthescheduleimmovable^property Defendant's Exhibits
Annexure-Bl	09.08.2023	Photocopyoftliephotographshowing^affixtureof Annexure86
Annexure-B2		Photocopyofthecomputer^{generated outputsinrelationto} theclassificationofloanaccount^{involvedinthiscaseas} non-performingasset
Annexure-B3	02.t1.2022	Photocopyofthe demandnotice^issr"redunder^S.13(2)ofthe Actby theauthorisedofficerofthedefendant^banktothe applicantcallinguponhimtodischarge^{the debtofthesum} of{59,07,713l-ason 02.11.2022^{withinsixtydaysfromthe} dateofthenotice^(alongwith^{photocopyofthepostal} receiptsforhaving sentthesametothe^applicantby registered post)
Annexure84	05.tL.2022	Photocopyofthe postal acknowledgement^{card signedby} the applicantforhavingreceivedAnnexure^{83sentto him} byregisteredpost
Annexure85	0s.11.2022	Photocopyofthe^postalacknowledgement^cardsignedby the applicantforhavingreceivedAunexure83^{sentto him} by registeredpost
Annexure86	09.08.2023	Photocopyofthepossessionnotice^{issr.redby the authorised} officerofthedefendantbankin^{respectoftheschedule} immovableproperty^(alongwitha^{photocopyofthe} forwardinglettertotheapplicant^issuedby^{theauthorised} officerofthedefendant bank)
Annexure87	t4.08.2023	Photocopyofthe postalacknowledgement^{cards signedby} the applicantforhaving^{receivedAnnexureB6sentto him} byregisteredpost^(alongwith^copyof^postaltrack consignment report)
Annexure B8	18.08.2023	Photocopyofthenoticefor^{sale issuedtothe applicant by} theauthorisedofficerof^{thedcfendant bankinrespectof} thescheduleimmovable^property

¶165

¶166

¶167

Appendix to SA 42712023

¶168

Annexure89	21.08.2023	Photocopyofthe postal acknowledgement^cardsignedby theapplicantforhavingreceivedAnnexure^B8senttohim byregisteredpost^(alongwith^{postal trackconsignment} report)
AnnexureBl0	rr.08.2023	Photocopyoftheextractofthe^{publicationofAnnexure86} madeinKannadainthe Kannada^Prabhadaily.
AnnexureB11	28.02.2017	Photocopyofthememorandumfor^{recording creationof} mortgagebydepositoftitledeeds executedby^{the applicant} infavourofthedef'endantbankin^respectof^theschedule immovable property
Annexure B12	14.06.2023	Photocopyofthevaluation reportin^{respectoftheschedule} immovable property
Annexure B13	23.08.2023	Photocopyofthe^photographshowing^affixtureof Annexure88
AnnexureB14		Computergeneratedidbased search^{reportinrespectofthe} scheduleimmovablepropertyfromthe websiteof^the Central Registry

¶169

¶170

Schedule to SA 42712023

¶171

SCMDI'I,E OT ITUOVABLE PROPERIY

¶172

All that piece and parcel of the immovable Property Residential vacant^site bearing No.357, BBMP Khatha No.663/2525/357^{(Now comes} under^BBMP Limits) situated at Attur Village, Yelahanka Hobli, Bangalore North Taluk measuring East to West: 3O feet; North to South: 40 feet, totally^measuring 1,200 sq.feet, standing in the name of Sri.Bopanna M.P. S/o.Late.M.K.Poovaiah and bounded on:

¶173

East by: Site No.358; West by: Site No.356 North by: Road; South by: Private eronep,--r

¶174

PRESTDTNG\f;'[:.

¶175

IN THE DEBTS RECOVERY TRIBLINAL - 1, KARNATAKA AT BANGALORE

¶176

PRESENT: SRI IMTI AZ ALI PRESIDING OFFICER

¶177

Dated the lTth day of November,2023

¶178

SECURITISATION APPLICATION NO. 427 OF 2023